One of the first consumer online services, CompuServe Information Service
was founded in Columbus, Ohio, in 1969.
It was the brainchild of Jeffrey M. Wilkins. His
father-in-law, who ran an insurance company, needed to buy a computer. He
wanted a particular model from Digital Equipment Corp., but the only one
available turned out to be much larger than needed. Then, the two men had
an idea: Why not buy it anyway and rent out the extra capacity?
Wilkins quit his job in the burglar alarm
business and set about running the new company.
Initially, CompuServe sold its excess computer
capacity to other corporations, but in 1978 it began providing services to
the owners of personal computers. The goal was to squeeze profits out of
underutilized assets by putting Wilkins' time-sharing computers to greater
use at night, when they were frequently idle.
The first online newspaper in the United States
was brought to consumers by CompuServe and the Columbus (Ohio) Dispatch in
July of 1980. At the time, CompuServe had 3,600 total subscribers.
In early 1982, The Dispatch is joined by other
U.S. newspapers in providing content via CompuServe. Between January and
October, 1982, The Los Angeles Times, The Middlesex (Framingham, Mass.)
News, The Minneapolis Star and Tribune, The New York Times, The San
Francisco Chronicle, The San Francisco Examiner, The St. Louis
Post-Dispatch, The Virginian Pilot and Ledger Star (Norfolk), and The
Washington Post.
From the outset, the online news delivery was
said to be an experiment, and all of the newspapers stopped the project by
the end of 1982. At the time, AP President and General Manager Keith
Fuller is quoted as saying:

"Since the newspapers began providing their electronic editions to
CompuServe, CompuServe has grown from 3,600 subscribers in mid-1980 to
more than 10,000 in the first quarter of 1981."

However, most observers give the credit for the growth to Radio Shack,
which introduced the first low-cost devices (the Videotex Terminal and the
TRS-80 Color Computer) during the same period.
Newspapers accounted for 5 percent of total
CompuServe system usage, according to an editor involved in the project,
Jim Crowley of The Dispatch. Chat, then called "Citizens Band
Communications," accounted for 20 percent, he adds.
Other newspaper executives were quoted as saying
the distribution method was just too expensive  for both the newspapers
and the consumers. CompuServe was charging $5 per hour of access after 6
p.m. and delivering about 30 characters per second. At that rate, it would
take 6.2 hours to download the equivalent of an average daily newspaper.
By early 1984, CompuServe topped the 60,000
subscriber mark and is charging 13 cents per minute of access during the
day and 10 cents a minute at night. Its fastest modems are 300 bps.
In 1986, H&R Block, primarily a tax-return
preparation company, bought CompuServe for $23 million, and it quickly
became Block's fastest-growing unit. Computer services contributed $68
million to Block's sales  an estimated 15% of revenues  and almost
$8 million in operating profits in the year ended April 30, 1989.
At the time, CompuServe's only real competitor
was The Source, a consumer online service based in McLean, Va. With just
53,000 users, The Source was only one-tenth the size of CompuServe, but
H&R Block bought it on June 23 and closed it down on Aug. 1, 1989.
In the 1990s, CompuServe was the first U.S.
online service to expand into Europe and, eventually, the rest of the
world. By 1993, it had more than 1.5 million subscribers and 90,000 of
those subscribers were in Europe.
In the heyday of consumer online services in the
mid-1990s, CompuServe had the reputation of being the "computer
nerd's online service." Of its thousands of forums, or bulletin board
areas, hundreds were devoted to various makes and models of computers and
types of software.
In 1997, CompuServe itself suffered almost the
same fate as The Source. It was bought by America Online, which primarily
needed its communications network and its thousands of local dialup modems
around the United States. AOL, however, did not close CompuServe down.